Special Report

How COVID-19 Affected Michigan's Economy

The U.S. economy reported its worst quarterly decline in modern history during the COVID-19 pandemic, with gross domestic product shrinking at an annual rate of 31.4% in the second quarter. The economy bounced back in the third quarter, but efforts to contain the virus’s spread throughout 2020 still resulted in a 3.5% annual economic contraction in the United States.

Arriving on the heels of a historic period of growth, COVID-19 brought about a decline in gross domestic product in every state in the country. However, no two state economies are alike, and partially as a result, some states were hit far harder than others.

Michigan is one of only eight states to report an economic decline greater than 5% in 2020. Economic output in the state fell by 5.4% from $471.6 billion in 2019 to $446.2 billion in 2020. Manufacturing was the largest drag on growth, with the sector’s output shrinking by 7.5% and detracting a net 1.4 percentage points from GDP.

Employment in Michigan’s manufacturing sector fell by 11% in 2020, more than double the sector’s 5% employment decline nationwide. Partially as a result, the number of people working in Michigan fell by 9.2% in 2020, well above the 5.8% national workforce reduction in 2020. Still, Michigan’s 4.9% unemployment rate remains considerably lower than the 6.1% U.S. rate.

States are ranked based on the percentage change in real GDP from 2019 to 2020. Data on GDP and industry-specific real GDP came from the BEA. Data on average annual employment and the seasonally adjusted monthly unemployment rate each came from the Bureau of Labor Statistics.

Rank State Change in GDP, 2020 (%) April 2021 unemployment (%) Change in nonfarm employment, 2020 (%)
1 Hawaii -8.0 8.5 -9.4
2 Wyoming -7.0 5.4 -4.1
3 Oklahoma -6.1 4.3 -4.9
4 New York -5.9 8.2 -10.3
5 West Virginia -5.5 5.8 -6.6
6 Louisiana -5.5 7.3 -1.8
7 Vermont -5.4 2.9 -9.3
8 Michigan -5.4 4.9 -5.8
9 Alaska -4.9 6.7 -8.7
10 Tennessee -4.9 5.0 -17.5
11 New Hampshire -4.7 2.8 -6.7
12 Nevada -4.6 8.0 -10.4
13 Rhode Island -4.5 6.3 -8.8
14 Wisconsin -4.5 3.9 -6.3
15 Pennsylvania -4.4 7.4 1.9
16 Maine -4.1 4.8 -6.4
17 Connecticut -4.1 8.1 -7.7
18 New Jersey -4.1 7.5 -8.4
19 South Carolina -4.1 5.0 -5.1
20 Illinois -4.0 7.1 -7.1
21 Ohio -4.0 4.7 -6.1
22 Delaware -3.9 6.4 -6.0
23 Massachusetts -3.8 6.5 -9.0
24 Minnesota -3.7 4.1 -6.9
25 Kentucky -3.7 4.7 -5.6
26 Missouri -3.6 4.1 -4.8
27 North Dakota -3.5 4.2 -6.7
28 Texas -3.5 6.7 -4.3
29 New Mexico -3.1 8.2 -6.7
30 Indiana -3.1 3.9 -5.5
31 Montana -3.0 3.7 -3.1
32 Kansas -3.0 3.5 -4.6
33 Florida -2.9 4.8 -5.2
34 Oregon -2.8 6.0 -6.6
35 Mississippi -2.8 6.2 -4.3
36 California -2.8 8.3 -7.4
37 Alabama -2.7 3.6 -4.3
38 Maryland -2.6 6.2 -6.8
39 Arkansas -2.6 4.4 -3.0
40 Georgia -2.5 4.3 -4.6
41 North Carolina -2.5 5.0 -4.3
42 Virginia -2.5 4.7 -5.0
43 Iowa -2.3 3.8 -5.1
44 Nebraska -2.1 2.8 -3.6
45 South Dakota -1.7 2.8 -3.4
46 Colorado -1.5 6.4 -5.2
47 Idaho -1.1 3.1 -0.7
48 Arizona -0.9 6.7 -3.1
49 Washington -0.7 5.5 -5.3
50 Utah -0.1 2.8 -1.6